Syria has taken measures to bring its banking system into line with other countries, drafting laws on private banking and banking secrecy, and introducing the open market rate for some foreign currency exchanges, the press reported Sunday, January 21.

The Ath-Thawra daily said the government debated two bills Saturday — one on establishing private banks, the other on secrecy — which it will submit to President Bashar al-Assad. The bill on private banks allows for "the creation of banks as private or joint venture companies with shareholdings," the paper said. "The public banking system and Syria's state insurance sector will hold 25 percent of the capital and the Syrian central bank will oversee the activities" of the new banks. "All the shares must be held by Syrian citizens in their own names, except those held by the public sector," the draft bill states.

Once approved by the authorities, the new banks will be open to Arab and foreign capitalization up to a maximum 49 percent in foreign currency.

The cabinet also adopted a bill stating that "banks operating in Syria will be subject to banking secrecy."

In December, the top political body of the ruling Baath party gave the green light to the setting up of private banks and a stock exchange, along with the passage of a bill on banking secrecy.

The banking sector in Syria is fully state-owned and made up of the Syrian commercial bank, banks covering industry, agriculture, real estate, along with retail banking and post office savings.

Back in August, four Lebanese banks — the Lebanese-European bank, Fransabank, the Bank of Lebanon and Overseas, and the European Bank for the Middle East — were for the first time given the go-ahead to operate in Syria.

Ath-Thawra paper also reported Sunday that Syria's commercial bank will henceforth carry out "some" foreign currency buy and sell operations at the real market rate for the dollar, as opposed to the official state rates.

"The economics ministry will soon authorize the commercial bank to buy and sell foreign currency at the real rates used in neighboring countries," the paper said. The move will be introduced gradually, "first for pilgrims and people going abroad for medical treatment."

The Syrian authorities use several exchange rates, ranging from 11.25 to 46 Syrian pounds to the dollar depending on the nature of the transaction, while in neighboring countries the dollar fetches nearly 50 Syrian pounds.

The move represents a step towards standardizing exchange rates in Syria, where businessmen have been calling for the abolition of exchange controls, seen as the biggest disincentive to investment. —(AFP)